Brent oil price also moderately declined yesterday by 0.66%; during May Brent oil declined by 11.7%.

The chart below shows the changes of WTI spot oil and Brent oil prices during May 2011.

As seen, crude oil prices fell sharply at the first few days of May and since then remained more then 10% below the initial price level.

The premium of Brent oil over WTI: this gap reached on Thursday, May 19th 13.34$/b. During May, the premium shifted and fluctuated very rapidly and ranged between 12 and 17.8$.

Despite the rapid change in the premium of Brent oil over WTI spot oil, there was still a strong correlation between the daily percent changes of these two energy prices during May as seen in the chart below.

The US dollar and crude oil during May

During May, the daily percent changes of crude oil prices were stem, in part, from the daily percent changes in the US dollar compared to major currencies mainly EURO and Canadian Dollar.

The chart below shows the strong correlation between EURO/USD and WTI spot oilprice, and the strong correlation of between USD/CAD and crude oil WTI spot oil.

The USD/YEN also showed strong correlation with Brent oil price.

The uncertainty in the financial markets related to the directions of major economies including US, Europe and Japan and speculations around their energy demand in the near future are probably responsible, in part, to the changes we currently see in crude oil prices during May.

World news – oil markets

Middle East

Iran and upcoming OPEC meeting

Following the takeover of Mahmoud Ahmadinejad, President of Iran, over oil ministry, there are still concerns in the oil market regarding his attendance in attend the upcoming OPEC meeting next month on June 8th, in Vienna Austria.

Iran is among the founding countries of OPEC and holds the world’s third largest proven oil reserves with 137.6 billion bbl, and is the second largest oil producer worldwide.

If Ahmadinejad will try to limit oil output in the upcoming OPEC meeting, this could affect crude oil prices and keep them up and even might push them a bit higher in the months to come.

Major crude oil prices are currently traded with moderate rises in the European markets:

The Nymex crude oilprice, short term futures (June 2011 delivery) is traded at 98.70 USD / barrel, a rise of 0.26 USD/b or 0.26%, as of 13.50*.

The Dated Brent spotoil price inclines by 0.08$/b and it is at 111.86 USD / barrel as of 14.01*.

(* GMT)

Thus, the current premium of Brent over WTI is at 13.16$/b.

Crude Oil price outlook and analysis:

Crude oil prices declined yesterday, and thus continued to demonstrate no clear trend as they did in the recent weeks; this is after they fell very sharply at the first few days of May. .

Oil traders continue to show no clear direction in regards to oil prices and thus oil remains at its current level with WTI spot oil remains around 100$ and Brent oil around the 110$.

There are still concerns from both the supply and demand sides: from the demand side, the speculation around the future of major economies’ oil consumption including U.S., Europe, Japan and China; from the supply side, there are concerns in regards to the upcoming OPEC meeting and the plans of OPEC to increase/decrease/leave unchanged its oil production.

There are still macroeconomic considerations such as the US recovery and Europe’s debt that could and will affect crude oil prices via the US dollar compared to other major currencies.

I still speculate that in the short term all these factors will continue to pull crude oil prices in different directions and eventually keep crude oil prices at their current high prices.

Here is a reminder of the top events and reports that are planed for today (all times GMT):